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H.B. 466, which becomes effective on October 12, 2016 (impacts transactions occurring on or after December 1, 2016), excludes “digital advertising services” from Ohio sales and use tax. Digital advertising services includes services where the vendor provides access to computer equipment (by means of telecommunications equipment) for the purchaser to enter, upload, download, review, manipulate, store, add, or delete data for the purpose of electronically displaying, delivering, placing or transferring promotional advertisements to potential customers.
H.B. 466 was passed to address the Ohio Department of Taxation’s (ODT) recent change to Information Release ST 1999-04 (reissued in December 2015) that provided more examples of what services qualify as taxable electronic information services. In that Information Release, ODT specifically mentions that inventory advertising services meet the definition of electronic information services if the services give the purchaser access to maintain contact information, upload pictures and videos, attach descriptions, add taglines and slogans, and manipulate its inventory to show accurate real-time inventory (e.g., automobile sales sites).
The new exclusion comes after Congress made permanent the moratorium on the prohibition of taxing access to the Internet (and repealed the grandfathering of certain states, including Ohio, that were permitted to tax Internet access—that repeal becomes effective June 30, 2020).
If you would like to discuss the impact H.B. 466 or electronic information services may have on your business, please contact John Trippier or any of the other professionals at Zaino Hall & Farrin LLC.